Week of 3 January 2022
Banks like to talk about human rights, but they don’t like responding to specific human rights allegations
Our key takeaway: BankTrack finds that banks respond to allegations, but often avoid addressing the specific issue raised. Without providing this more specific detail, it’s unclear that banks can genuinely speak about conducting human rights due diligence.
BankTrack published ‘Actions speak louder: Assessing bank responses to human rights violations’ which assessed 38 banks:
- The importance of focusing on how banks respond to specific human rights impacts: BankTrack put together Human Rights Benchmarks in 2014, 2016 and 2019 that look at written policies, processes, grievance procedures and human rights reporting of banks. BankTrack describes a new evolution in its approach, with the need to evaluate banks’ “role in remediating or addressing specific adverse human rights impacts.” Accordingly, BankTrack has developed a new methodology which will in due course be integrated into its Human Rights Benchmark. In short, BankTrack is now looking at whether a bank has (1) publicly responded to an impact in a way that addresses the allegations raised; (2) taken appropriate action to prevent, mitigate or address the impact (for example through engaging with its client, or responsibly divesting where appropriate); and (3) monitored the steps it has taken to assess their effectiveness.
- Banks respond to allegations, but “often avoid addressing the specific issue raised”: BankTrack finds that “[o]ut of 90 instances in which BankTrack or other civil society groups contacted banks regarding specific allegations of adverse human rights impacts, banks responded in 69 instances (77%).” However, “[o]ver half of the 69 responses (36, or 52%) did not address the substance of the issue raised or acknowledge the bank’s link to the impact. Only 11, or 16% of all responses, met the standard for a full score on our first criteria, by both acknowledging the bank’s link to the impact raised, and responding to the substance of the issues.”
- Banks don’t describe specific actions or monitoring actions, although some banks perform better than others: “In 44 instances (64% of all responses), banks provided no detail of any action taken to prevent, mitigate or address the impact.” Further, “[t]here were no instances where a bank provided details on whether or how it monitored the impact of any action taken to prevent, mitigate or address the impact.” BankTrack remarks on geographic differences, with French banks performing better than US and UK banks, that in turn perform better than other banks. “French banks responded in 11 instances out of 14, with the average response scoring 0.75 out of 3. Banks in the US and UK also responded often (14 responses out of 17 in the US, 14 responses out of 15 in the US), but these responses scored much lower for their quality (0.29 out of 3 in both cases).”